Bad Car Loan

[golffan63]

I have a 2011 vehicle that I owe $16,000 at 2.17% payments of $295.53 bi weekly. It will take 2 years to pay off. I currently have 190,000k on the vehicle with warranty coverage up to 200,000k. The payments are killing my cash flow. I have an emergency fund with $13,000 in it. Should I use a good chunk of this and pay down the loan? Once done I start to replenish this fund. Help

[FarmerPete]

What's the car worth?  Can you sell it and make enough to pay off the loan?

[golffan63]

With the Kilometers I have on it I would be taking a hit. I have not check lately however could probably get $10 to $12000 which would mean I still owe $4,000 to $6000

[purplepants]

I have a 2011 vehicle that I owe $16,000 at 2.17% payments of $295.53 bi weekly. It will take 2 years to pay off. I currently have 190,000k on the vehicle with warranty coverage up to 200,000k. The payments are killing my cash flow. I have an emergency fund with $13,000 in it. Should I use a good chunk of this and pay down the loan? Once done I start to replenish this fund. Help

I would.  I would find out what you can sell it for, take the difference from your savings, and be done with it.   Then use savings to pay cash for a cheap used car that's good on gas. 

Take that $600 a month and whatever else you can scrape together replenish your emergency fund. 

[Ricky]

Jeeze that's a shit ton of miles for a 2011. Incredible.

MPG? Type of vehicle? Job requires certain type of vehicle? Confident in book value? Too little information here to make a decision.

Best guess is you're not going to save a ton of money by switching but I could be wrong.

[RWD]

Jeeze that's a shit ton of miles for a 2011. Incredible.

I'm guess it's kilometers based on the follow-up post. Which makes it 118k miles. That's still about 29k miles per year though...

The interest rate is low enough that I would keep making minimum payments. Whether you want to keep the vehicle or not depends on if you would choose to buy your vehicle as it is right now for the amount you could sell it for.

[MattC]

I think you've got to figure out your annual automotive costs.  Add up depreciation + anticipated repairs and maintenance + insurance + gas + taxes and fees + interest you're paying or not earning on the true value of the car.  That's how much poorer your car makes you per year. 

True value of the car will be the kelly blue book or Edmunds value of the car (what you can sell it for).  Depreciation will be that value minus the value of your car model one year older with one more year of your miles on it. 

Your payments are actually irrelevant for this check.

Compare your annual automotive costs with those for a more affordable vehicle; say a $4k  Civic/Corolla/Xa/Xb etc.; preferably older with low milage.  Note that for a cheap car you own outright, you don't have to pay for collision insurance, so your insurance number would get lower.  And any of those cars should cost you under $1k a year to repair and maintain, even if you're putting on high milage.

In short, you probably will end up saving some money by going to a cheaper vehicle.  If your current vehicle is a VW Golf, maybe you'll end up saving ballpark $2.5k a year.